Ternium S.A.

Good morning, ladies and gentlemen, and thank you for standing by. My name is Kelvin, and I will be your conference operator today. At this time, I would like to welcome everyone to Turnium's third quarter 2025 results call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, please press star 1 again. Thank you. I would now like to turn the call over to Sebastian Marti. Please go ahead.

Good morning, and thank you for joining us. My name is Sebastian Marti, and I am a Global IR and Compliance Senior Director. Yesterday, we announced our financial results for the third quarter and first nine months of 2025. This call is meant to provide additional context to that presentation. I'm joined today by Maximo Bedoya, Turing's Chief Executive Officer, and Pablo Maurizio, the company's Chief Financial Officer, who will discuss Turing's business environment and performance. After our prepared remarks, we will open up the floor to your questions. Before we begin, I would like to remind you that this conference call contains forward-looking information and that actual results may vary from those expressed or implied. Factors that could affect results are contained in our findings with the Securities and Exchange Commission, and on page two in today's webcast presentation. You will also find any reference to non-IFRS financial measures reconciled to the most directly comparable IFRS measures in the press release issued yesterday. With that, I'll turn the call over to Mr. Bedoya.

Thank you, Sebastian. Good morning, and thank you all for joining our quarterly conference call. In the third quarter of the year, Ternium continued to improve its performance. We saw an increase in EBITDA driven mainly by a decrease in cost per ton supported by the continued execution of Ternium's Competitiveness Plan. Our cash generation remains strong, with operation operating activities contributing over half a billion dollars during the quarter. Additionally, Tarnium's board of directors declared an entering dividend of $0.90 per ADS, which keeps the payment level the same as last year. Meanwhile, the business environment continues to be marked by uncertainty, largely resulting from the ongoing changes in the U.S. tariff framework. Within this environment, the U.S.-Mexico trade agreement stamped out as particularly significant for our business. In recent weeks, we have engaged in dialogue with stakeholders on both sides of the border. This conversation has revealed support for policies that strengthen the USMCA framework and promote deeper regional integration. The Fortress North America concept is gaining traction, highlighting the importance of deeper economic and industrial ties among the USMCA members. As trade negotiations progress, the focus remains on maintaining fair competition, addressing imbalances, and reinforcing rule of orders, all of which are important to ensure the long-term resilience and growth of the industry in the region. Along these lines, the first formal steps have already been taken for the PlanetUSMCA review, which consultations launched to obtain feedback on the agreement from interest parties. In Mexico, a certain result from US trade policies has had a significant impact on steel demand during 2025, recognizing the challenges created by this period of trade volatility The Mexican government is prioritizing efforts to fortify the country's value chain, aiming to promote greater self-sufficiency and resilience against external competitive pressures. These incentives are closely aligned with U.S. priorities. Throughout 2025, the Mexican government has taken a proactive stand by launching initiatives such as the Plan Mexico. implementing targeted measures to counter unfair competition from certain Asian countries and imposing tariff on imports from nation without a trade agreement with Mexico. For example, in September, a proposal was published to increase tariff on close to 1,500 categories, including steel and its derivatives, for imports originating from countries without a trade agreement. It is expected that tariff on steel currently at 25%, and its product, auto parts, engines, and appearance will rise to 35%. In the case of light vehicles, the tariff is expected to increase to 50% versus the current 20%. A ruling is expected in November following the approval of the final proposal for the tariff increase. These efforts are primarily aimed at increasing local value adding, promoting more resilient North America supply chains, and reducing reliance on imports from Asia. We strongly support these policies and they are vital for the region's economic development and for the continuous growth of the steel industry. In Brazil, industrial activity continues to expand even in the face of high interest rates. The overall steel environment remains healthy with expectation of 5% growth in apparent steel demand in 2025. In addition, our ongoing efforts to increase the efficiency of our operations in the country are yielding positive results, with continued decrease in cost per ton. But still, the Brazilian market continues to face a high level of unfairly trade imports, primarily from China. In the first nine months of 2025, imports of finished steel products rose by 33% in Brazil, as excess production from China flows to international markets. Unlike the United States, Europe, or Mexico, Brazil still lacks effective trade defense mechanisms. It is crucial that ongoing anti-dumping investigations conclude with the imposition of duty, whether preliminary or final, on the relevant products under review to address these challenges and defend the domestic industry. Turning to Argentina, after a period of growth, activity across the steel value chain leveled off due to increased uncertainty leading up to the midterm elections. Now that the elections are behind us, I am optimistic that Argentina may be entering a period of structural reforms, paving the way for significant growth opportunities across steel value chains. This is especially true in the country's most dynamic sectors, like agriculture, mining, and oil and gas. Before moving on, I am pleased to share that this quarter we received the Steely Award for Excellence in Sustainability from the World Steel Association. This award recognizes Sternium's Wind of Change project, our first renewable energy initiative in Argentina. The wind farm now provides approximately 90% of our externally sourced electricity in the country. significantly reducing our environmental footprint and delivering considerable cost savings. To sum up, the U.S. transformation of the global trade framework has brought significant challenges, but these adjustments are necessary in light of aggressive trade practice by China and other Asian countries. To mitigate the evolving global trade environment, We are focused on strengthening our market position through ongoing optimization and cost reductions. This effort ensures termites remain resilient, efficient, and able to deliver sustainable value to stakeholders while adapting to change and pursuing growth. Thank you very much for your continued support.